SCA could sell unified forests and forest products unit
By Olof Swahnberg
STOCKHOLM (Reuters) - Swedish paper and hygiene products group SCA said on Friday it would merge its forest lands and forest products into one division in a signal it may be preparing to sell them, sending its shares up.
SCA, Europe's biggest private forest owner, has in recent years grown its hygiene product operations to around 85 percent of turnover after a series of acquisitions and sales.
Some analysts have said it would benefit from dropping its forest products operations, to focus fully on hygiene, the global long-term market outlook for which is strong.
Asked during an analyst conference call if the reshuffle potentially allowed for a further separation of SCA's businesses, Chief Executive Magnus Groth said: "I will not say No to that."
SCA's existing forest products unit, which includes only part of SCA's forest lands, in 2014 had an operating profit of 2.5 billion crowns ($295.6 million) on sales of 16.5 billion.
SCA shares were up 3.9 percent at 0940 GMT. Swedish forest industry firm Holmen, which some analysts have said would be a suitable merger candidate for SCA's forest operations, was up 1.7 percent.
Swedish business magnate Fredrik Lundberg would be well placed to broker a deal.
Lundberg is the main owner of Holmen as well as of SCA's second-biggest investor Industrivarden and took over as chairman of Industrivarden this year after a power struggle.
The new forest products division plans to invest 7.8 billion crowns over the next three years to more than double capacity of bleached sulphate pulp at its Ostrand mill on the Swedish east coast, SCA said.
SCA said it would also merge its two hygiene products divisions, whose products range from tissues to incontinence protection into one. The business competes with Procter & Gamble and Kimberly-Clark.
"The enhancement of the organisation and the investment in increased pulp production will secure the long-term competitiveness of the businesses," Groth said in a statement.
(Reporting by Olof Swahnberg, writing by Anna Ringstrom; Editing by Keith Weir)
